BORROWERS Mortgage Commentary 01 / 2015
Borrowing Costs
Application Forms
Apply Online
Type of Loans
Like a Loan?
Fortnightly Newsletters
Loan Calculators
Broker Help Zone

Contact us
Switch to Investors

General Finance Mortgage Commentary

Issue 2015 /1         20 February 2015

Welcome to the first fortnightly General Finance Mortgage Commentary for 2015.  We aim to keep you informed on developments at General Finance Home Loans and the mortgage market in general. 

The Money Market
This morning (9 am on 20 February 2015) the money markets were at the following levels:
Official cash rate    3.50% (unchanged)
90 day bill rate       3.64 (down from 3.67)
1 year swap rate    3.59 (down from 3.74)
3 year swap rate    3.62 (down from 3.94)
10 year bond rate   3.40 (down from 3.88)
NZ/US dollar      0.7515 (down from 0.7785)

Non-bank Deposit Takers Licence
General Finance has been issued with a non-bank deposit takers licence by the Reserve Bank. This means that we can continue to operate as a non-bank deposit taker and accept retail deposits from the public.  This is positive as to date few finance companies have so far received such authorisation. Our business plan is to continue to grow our book on an incremental basis.

House Market Still Strong
So far this year, agents in Auckland have been reporting that the demand for housing is still strong. There are more buyers than houses available.  Auckland is experiencing strong immigration growth from three sources. There is internal immigration from provincial New Zealand and cities such as Wellington. There are those people returning from travelling and working overseas and of course new immigrants.  We suspect that even more New Zealanders would like to return, if the exchange rate was more favourable. Gone are the days, when those returning New Zealanders, received a nice windfall on their overseas savings. Other factors are driving the market, including the lack of supply of both dwellings and land suitable for building. This will continue certainly for the rest of this year and maybe into next year as well.

Interest Rates
Over the past few months many countries have reported low or in some cases negative inflation rates. This is due to sluggish growth, low interest rates and a substantial drop in oil prices. New Zealand is experiencing its lowest inflation rates since the 1950s. Our nearest neighbour is probably in recession and has begun cutting wholesale interest rates. That puts us in a difficult position, as interest rates are higher here than in Australia and it is pushing our currency up. It is almost at parity. If Australia cuts its rates again, which they probably will, our currency may appreciate further. This is hurting our exporters to Australia. This is serious, as that country is our second largest export market. Rationally our Reserve Bank should be starting to cut our interest rates but believes that may add more fuel to the already overheated Auckland property market. At least all this is positive for those with mortgages - interest rates will not be increasing this year.

Asset Lends
We currently have funds to lend. We are happy to do asset lends.  For example, we recently lent funds to a borrower who was wanting to tidy up and renovate an investment property with a view to selling.  He needed to take time off from work to carry this out. We capitalised our interest for six months, which enables the borrower to complete the upgrade and to sell the property in an orderly fashion.


Mortgage Interest Rates
For updated mortgage interest rates, either for new business or applicable to your existing loan, please contact your Lender (below) or the General Finance Limited Loan Administration Department.

As everyone's personal circumstances are different and the tax treatment of their affairs is always determined by their own circumstances, you should not act on any comments made in our Commentary without obtaining your own independent professional advice.

General Finance Limited is a Registered Financial Services Provider, with registration number  FSP8882.